Land Pricing

Dreaming ends when your wallet has to open.

The best time for real estate tough love is at the beginning of the planning process. If your spare time is consumed with thoughts of building your dream home, it’s best to be realistic about costs and availability. That means looking at the range of available properties in the areas you want to live in and evaluating both the raw land price and the costs to develop the infrastructure (water, roads, power, septic, etc). This post will discuss land prices in Sonoma County, but there are links to searches for Marin and Napa as well as for the more affordable and distant (from the Bay Area) property in Mendocino and Lake Counties.

Sonoma Land over 1/3 acre is priced as low as $24,000, but that’s for a steep hillside that isn’t buildable. The first pages of listings are filled with hilly sites, heavily forested sites, and typically long travel times to get to an urban center.

At the time of writing, there is a one acre lot near Cotati for $50,000 that looks like it might be a good value. There is no water or perc test for septic, though, so it may be unbuildable. There are also no trees and no views to speak of. For someone looking for flat land for gardening, easy construction, 4-H or other kid projects, this might be great.

Land in Healdsburg or the city of Sonoma starts low for unbuildable lots, but is quickly over $400,000 by the end of the first ten listings and nearly $800,000 by the end of the second page of listings. Demand drives price and scarcity keeps sellers optimistic they will get their price.  If you absolutely, positively have to be in Healdsburg or Sonoma, realize from the beginning that affordable land is going to be hard to find.

There are hundreds of land listings in Sonoma County. If you are serious about buying land to build, it’s worth looking at each and every Sonoma lot for sale online. Nothing will help you calibrate your wants and needs more than a look at the total market. You can stop when you are only a few hundred thousand dollars over your limit…

Napa Land over 1/3 acre

Marin Land over 1/3 acre

Mendocino Land over 1/3 acre

Lake County Land over 1/3 acre

Vacation Rentals

Vacation rentals are a big business and they can help pay for mortgages and other property improvements. However, in order to protect residential neighborhoods from the impact of partying vacationers, Sonoma County zoning restricts where and how vacation rentals are allowed. You can still create one, but you have to make sure you have purchased the right piece of land.

Sonoma County Vacation Rental Resources:

Information

Vacation Rentals Ordinance
Note: The vacation rental ordinance has not been adopted for the Sonoma coast (i.e. Sea Ranch, Bodega Bay) and is not applicable to rentals in those communities.

Application Package

Vacation Rental Handout — Forms and Instructions

Sonoma County Transient Occupancy Tax page and Forms

Frequently Asked Questions

Vacation Rental (FAQs)

 

Zoning in Sonoma County

Zoning Overview

Zoning is the process by which governments regulate development. Here’s the short list of purposes from the zoning pages of the official Sonoma County web site and a link to the Table of Contents for Sonoma County Zoning

(a) To provide for the orderly and beneficial land use of the county;

(b) To protect the character and social and economic stability of agricultural, residential, commercial, industrial and other communities within the county;

(c) To protect the public safety and welfare by regulating the location and uses of all structures and land;

(d) To protect and conserve the scenic, recreational and natural resource characteristics of the county;

Its hard to argue with the purity of purpose of those four sentences.  When a noisy or night-time business is prevented from opening to protect the residential character of a neighborhood, most of us would approve. When a property owner is prevented from putting up a large home in a small backyard, the neighbors will probably appreciate the county’s effort to preserve their property values and privacy.

Real World Implications

If you are planning to build a home in Sonoma County, the first impact of zoning is on price. In many parts of the country there are no zoning restrictions and farmers and ranchers often convert their property into residential subdivisions.  The ready availability of land for building keeps land costs low, but encourages sprawl development, long commutes, and expensive government infrastructure for roads, water, sewer, education, etc.  In contrast, Sonoma County has a general plan that designates minimum lot sizes and requires detailed studies and reports before approving subdivisions, even in zones where they are allowed. These two factors, minimum lot sizes and control of the subdivision process, keep land expensive relative to any area without zoning.  For instance, the farming areas outside Healdsburg are often zoned with a 20 acre minimum. If you value farm land at $50,000 per acre, that could create a $1,000,000 price tag before you drill a well, install a septic system, or create a road. In the forested hills farther from town, zoning might mandate 80, 160, or even a 320 acre minimum size. If you just want a humble cabin in the woods, you might be forced to buy more land than you really want or have to hunt for an already existing lot that might have been grandfathered into law at a smaller size.

The second impact of zoning is on the control of what you can build and do with your property. A common example of that is someone who wants to build a second home that they want to rent out when they are not there. Vacation rentals are a big business and they can help pay for mortgages and other property improvements. However, in order to protect residential neighborhoods from the impact of partying vacationers, Sonoma County zoning restricts where and how vacation rentals are allowed. You can still create one, but you have to make sure you have purchased the right piece of land. In a similar vein, wedding venues are strongly regulated as to how many events they can have, their hours of operation, when the music has to stop, etc.  These are primarily common sense regulations, but if you aren’t aware of them ahead of time you could end up planning a future that isn’t allowed.

Sonoma County and other jurisdictions

The story doesn’t end with Sonoma County. The nine incorporated cities in Sonoma County have their own guidelines which often differ from county regulations.  If you know where you want to buy land, it pays to study the zoning regulations so you will know what is allowed.

 

Under All is the Land

The first five words in the Realtor’s Code of Ethics declare that “Under All is the Land“.  Combine that with the first and most famous rule of real estate value “location, location, location” and you pretty much know the key principles that drives real estate prices.  Let’s look at some examples to help understand Sonoma County underlying land values.

There are two world class town centers in Sonoma County. No offense to Santa Rosa and the charming Railroad Square area or the Petaluma river front, but the plazas in Healdsburg and Sonoma are true destinations.  All else being equal, the closer you are (location, location, location) to the center of the action in those towns, the higher price you will pay for the real estate.  As of the writing of this post, a half acre lot near the Healdsburg Plaza is selling for over $700,000. For buyers coming from San Francisco that may seem like a bargain, but to most other folks, that’s a hefty hunk of change for a lot that will be expensive to build on. Things are equally tight close to the Sonoma Plaza. There’s a lovely two acre lot not far from the plaza for sale for $1,550,000. You could say it’s a bargain at only half the price per acre of the lot in Healdsburg, but that’s not the point.  The point is that you will pay dearly for the privilege of having a significant lot in the heart of the action in either Sonoma or Healsdsburg.

If you’re starting to think like a real estate shopper, your next question is going to be, “How far do you have to go for cheaper land?”.  There are two correct answers.  Prices drop as you get farther from town, but after about fifteen minutes, a lot of buyers will say, “Too far.”. That’s true of going up hills, into the woods, out dirt roads or out paved roads. Most buyers just don’t want to drive farther than that for a cup of coffee or to go to a restaurant.  For many people the line is drawn at closer to ten minutes than to fifteen. (It’s probably useful for you to start timing your own shopping and dining expeditions to figure out what is comfortable for you. ) That fifteen minute drive radius from the town center helps define standard pricing. Once you get farther than that, the price begins to drop, often significantly. Of course, by the time you are fifteen minutes from town, the per acre price is much lower, but you will probably have to buy a much larger piece of land to satisfy zoning requirements. More about that in another post.

The other concept I want to introduce can be called core home site value. A piece of land has some value by itself, but is made more valuable by the development of key elements necessary to have a structure. In northern California or other areas with strong zoning laws one of the key elements of value is the “entitlement” to build a house (allowed to get a permit). You have to show availability of water year round. There has to be a way to dispose of household waste. Sonoma County fire departments require that the home be accessible to fire trucks and have water available to fight fires. Most people want to have access to the internet, phone service, gas and electricity, and regular trash pickup.  If your proposed lot has positive answers to that listing of service questions, it has most of the necessary elements to be a buildable lot.

Of course, necessary isn’t optimum. Buyers bring their own life experiences to the process. For some, privacy will be an absolutely key element. For others, a wonderful view is their main goal. Yet others will want peace and quiet, forest cover, open meadows, vineyards, areas for gardens or horses or some other amenity that is important to them. So, as you start to look through the listings on the site, please keep in mind that the inexpensive lots are almost always at a stage where no development work has been started. The money you save initially may get used up on roads, wells, septic systems, grading, or providing power (PG&E or solar). The costs of building an infrastructure from scratch is why so many people turn to a tear-down of an existing structure as a cost-effective approach to obtaining a site to put up their new home.

Interesting Listings as of June 2, 2013 (PDF file)

These have not been certified as accessible by the Blu team.  They are just available real estate listings.

 Cloverdale Land Listings

Healdsburg Land Listings (with Windsor and Geyserville)

Sonoma Land Listings